Britain’s manufacturing sector contracted further in December, while business optimism fell to its lowest level in a year, a closely watched survey suggests.
S&P’s global Purchasing Managers’ Index (PMI) for UK manufacturing fell to 46.2 in December, lower than the 46.4 recorded in the mid-December “flash” estimate.
The December figure also marks a slowdown compared to Reading 47 in November.2, which was a seven-month high. The 50 mark separates growth from contraction.
The deterioration in the manufacturing sector reflects weaker demand, both domestically and abroad.
New business placed with UK manufacturers fell for the ninth month in a row as businesses reported weak economic conditions were impacting demand. Bad weather conditions also contributed to this decline.
Source: S&P
Demand from major trading partners, such as the United States and Europe, saw a “further contraction” in new exports, which declined for the twenty-third consecutive month.
“UK manufacturing output contracted at an accelerating rate at the end of 2023,” said Rob Dobson, director of S&P Global Market Intelligence.
“The demand environment remains frosty, with new orders declining while conditions remain difficult both domestically and in key export markets, notably the EU,” he continued.
It seems unlikely that things will improve any time soon. Business optimism fell to its lowest level in a year, reflecting a weak economy, high interest rates and customer shutdowns.
“With concerns regarding high interest rates and the cost of living crisis weighing on demand, the outlook for manufacturers in the coming months remains decidedly bleak,” Dobson said.
With weak demand and fading optimism, December saw further job losses in the manufacturing sector. This was linked to efficiency gains and hiring freezes, the report notes.
Sales prices increased for the second month in a row, albeit slightly. “Where an increase has been reported, it is primarily due to efforts to protect margins,” the report said.
By city AM
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